By Frank Tang
Monday, February 11, 2013
NEW YORK -- Booming demand for gold as a store of wealth among Asian
investors is driving physical gold bars and coins out of the United States
and into Asia.
A growing number of gold vaults for affluent Asians and new precious
metals investment products, particularly exchange-traded funds, have led to
an exodus of gold owned privately from the United States into emerging
economic powers such as China.
On Friday, Commerce Department data showed U.S. exports of nonmonetary
gold, which excludes central bank transactions, soared by 43 percent to $4
billion in December from the previous month.
highest total and the biggest month-on-month jump in U.S. private gold
exports since September 2011, when gold rallied to a record high over $1,920
an ounce. Prices are currently about 14 percent below the peak at $1,643 per
Hong Kong accounted for around $2 billion, or
half of the nonmonetary gold exports for the month.
Uncertainty about the U.S. fiscal situation and euro-zone debt crisis
have prompted many ultra-rich gold investors to move their bullion holdings
to Hong Kong and Singapore from traditional gold hubs in Switzerland, London,
and New York.
"As the Asian market becomes more affluent, we are seeing more
private investors looking to move their metals offshore," said Miguel
Perez-Santalla, vice president of online
precious-metals exchange BullionVault. "People
want to have their money next to them."
A shortage of storage space has been a growing issue in Asia as
vaulting companies have not kept up with the pace of inflow of physical
bullion, he said.
U.S. gold exports to Hong Kong have been steadily increasing in the
past several years as wealthy Asian individuals looked to diversify their
portfolios into gold, said Michael George, a commodity specialist at the U.S.
In November, ETF Securities launched three ETFs that are backed by
physical precious metal in Hong Kong.
Some money managers cited the recent U.S. fiscal crisis for the
physical gold outflow.
"The uncertainty over the debt ceiling and
fiscal cliff have greatly diminished confidence in the U.S. banking
system," said Jeffrey Sica, chief investment
officer of SICA Wealth, which manages over $1 billion in client assets.
George said some of the gold import to Hong Kong could be transferred
to China and nearby countries such as Taiwan, which has also seen an increase
in U.S. gold imports in recent years.
Last Tuesday data showed Hong Kong's net gold flow to mainland China
jumped 47 percent in 2012 to a record high of 557.478 tonnes,
a sign of strong Chinese demand.
China, the world's second largest economy, has been vying with India
to be the world's top gold consumer.
Gold demand from China is likely to grow around 10 percent in 2013, an
official from the trade group World Gold Council said in a recent interview.
Hong Kong's proximity to the prosperous southern China and free
capital-flow environment have benefited the former
British colony as China's trading window to the world.